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  • Writer's pictureMike Paterson

Cracks appearing in the Euro rally

Tuesday 8 February 2022

10-year US treasury yields leading the way and helping to underpin the Greenback as the new week starts to unfold with a little more life than we saw for most of yesterday. Euro weakness notable across the board as markets factor in the post-ECB euphoria on rate hikes after Lagarde yesterday threw some dovish tones on last week's rhetoric.

As ever, a case of not over-analysing or second-guessing but keeping your focus on price action in core and cross-pairs and identify ranges and what levels present value for money. Patience invariably a virtue but don't confuse patience with being stubborn either in entry or exit.

GBPUSD: Support still at 1.3500-10 helped by the EURGBP retreat and some GBPJPY demand but still struggling to make too much headway amid firmer USD tones and large option interest today at 1.3560. EURGBP: Failure into 0.8480 and retreating on the general EUR weakness and currently testing support at 0.8420-30, helping to underpin GBPUSD. GBPJPY: Support now at 155.80 and testing 156.20 again as I type amid the JPY supply and EURGBP retreat.

EURUSD: Finally testing the expected dip demand into 1.1400 after yesterday's failure at 1.1450 amid the general EUR retreat.USDJPY: Now finding support around 115.00 amid that USD dip demand and JPY supply but failure above 115.50 this time so far. EURJPY: Capping at 132.00 as the EUR supply outstrips that of JPY. Dip demand now at 131.20-30 and 131.00. USDCHF: 0.9220 support line still as we see a retreat from 0.9260 amid further EURUSD selling but with SNB ever vigilant and some USD demand to help support. Rally sellers still poised.EURCHF: In retreat again and looking at 1.0530 support as I type amid the EUR supply. SNB will be vigilant that further falls are kept in check.

AUDUSD: Support found at 0.7100 with some decent option interest there today as well as the AUDJPY demand and a rally to look at 0.7140 after ex-RBA Edwards pointed to 4 rate hikes this year. General USD demand helping to cap. USDCAD: 1.2660 now providing support again amid oil prioce capping and general USD demand but failure at 1.2700 so far.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.37 GMT

GBPUSD 1.3532

EURUSD 1.1400

EURGBP 0.8425

GBPEUR 1.1869

GBPJPY 156.09

GBPCAD 1.7156

GBPCHF 1.2511

GBPZAR 20.9854

GBPHKD 10.5398

USDJPY 115.34

EURJPY 131.49

EURCHF 1.0535

EURHKD 8.8802

AUDUSD 0.7129

USDCAD 1.2680

USDCHF 0.924

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